FTC: T-Mobile made millions adding bogus charges onto consumers’ phone bills
July 04, 2014
In a lawsuit filed Tuesday, the Federal Trade Commission is charging T-Mobile with making hundreds of millions of dollars by putting charges on mobile phone bills for “premium” SMS subscriptions that, in many cases, were bogus charges that weren’t authorized by its customers.
The FTC alleges that T-Mobile received from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information, or celebrity gossip that usually cost $9.99 per month.
In some cases, T-Mobile continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent, according to the FTC’s lawsuit.
When charges are placed on a bill without the consumer’s authorization, it’s known as “cramming.”
T-Mobile has reviewed the FTC lawsuit and found it to be “unfounded and without merit,” John Legere, president and CEO of T-Mobile, said in a statement.
Many more consumers were probably crammed than those who complained and T-Mobile documents showed that the company knew as early as 2012 that there were a high number of consumer complaints, the lawsuit states.
The FTC has filed lawsuits against alleged mobile cramming operations including Jesta Digital, Wise Media, and Tatto Inc. T-Mobile billed its customers for the services of these FTC defendants as well as a company sued by the Texas Attorney General, according to the FTC lawsuit.
The lawsuit against T-Mobile alleges that the company’s billing practices made it difficult for consumers to determine that they were being charged and who was making the charges. When consumers viewed a summary of their T-Mobile bill online, according to the lawsuit, it didn’t show consumers that they were being charged by a third party, or that the charge was part of a recurring subscription.
The heading, “Premium Services,” could only be seen after clicking on a separate heading called “Use Charges.” Even after clicking, consumers still couldn’t see the individual charges.
The lawsuit also alleges that T-Mobile’s phone bills, which can be more than 50 pages, made it nearly impossible for consumers to find and understand third-party subscription charges. After looking past a “Summary” section as well as an “Account Service Detail” section, both of which described “Usage Charges” but didn’t itemize those charges, a consumer might reach the section labeled “Premium Services,” where the crammed items would be listed.
The information would be listed there in an abbreviated form, such as “8888906150BrnStorm23918,” that didn’t explain that the charge was for a recurring third-party subscription supposedly authorized by the consumer, the lawsuit said.
If consumers complained, T-Mobile failed to provide consumers with full refunds in many cases, the lawsuit alleges. And, the FTC charges, T-Mobile offered some customers refunds of two months’ worth of the charges, and in other cases instructed consumers to seek refunds directly from the scammers – without providing accurate information to contact them.
The lawsuit also states that T-Mobile claimed that some consumers had authorized the charges despite having no proof of the approval.
The FTC’s lawsuit seeks a court order to prevent T-Mobile from engaging in mobile cramming, to obtain refunds for consumers, and for return of the money T-Mobile made on cramming.
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